Taxation of Pensions Bill

Debate between Lady Hermon and Nigel Mills

Wednesday 29th October 2014 Commons Chamber

[Nigel Mills]

The hon. Gentleman has to be right. The issue was raised in the Pension Schemes Bill Committee evidence sessions last week, and we will get to it again when we discuss the provisions on guidance. It is hard to work out the line between advice, which might say, “The best thing for you is to do x,” and guidance, which just says, “Here are the options and the various things to think about. Make sure you shop around. Thanks for calling.” Guidance such as that will not help people, who will forget it by the time they put the phone down or walk out of the meeting room.

We need the people getting the guidance to have worked out their financial situation—their pension pots, their debts, their other income, their state pensions and other employer provisions—so that when they go to get their guidance, they can set out their circumstances to the person guiding them, and that guidance can be focused on the sorts of choices they could reasonably make. That is probably about as far as we could get, because once someone says, “You should pay off your debts first”, they are getting into giving advice, and that may not always be right; it risks creating liabilities and people being mis-sold things. This will be an extremely hard balance to strike.

[Lady Hermon]

I apologise for having to leave the Chamber briefly to go to the Select Committee on Northern Ireland Affairs; duty called. I entirely agree that this is a radical and fundamental change to pensions entitlement, as regards when people can benefit from and draw down their pensions. Given that it is such a radical and fundamental change, does the hon. Gentleman share my disappointment that the Bill, which runs to 54 pages, I think, and has three clauses and a schedule, is so highly technical that no ordinary person in the street could possibly understand their pension entitlement?

[Nigel Mills]

It is certainly interesting that the Bill is 57 pages long and has only three clauses, with the rest dropped into a schedule at the back. However, complicated rules are being changed, to take away some penal tax charges, among other things, and I guess it does not matter how the provisions are drafted; whether they are in a schedule or a clause, we get to the same position in the end. One of the problems with pensions is that everything is so fiendishly complicated that almost nobody can understand what all the rules are.

I am concerned about the provision in which the Government seem to be repealing the requirement that people must, before buying an annuity, have had a chance to check the open market situation. Clearly, we are not taking away the chance for people to compare annuity rates, because we are not compelling them to buy an annuity, so that option will still be there. A fall-back is written into the rules that says that before somebody defaults into buying an annuity from their pension provider, they must, under regulations, have had the chance to shop around and to be given advice. That looks like a sensible provision that should perhaps be kept. Repealing it strikes me as being a little too optimistic about how well this market might work in the early years.

Moving on to the general principle of the Bill, these changes reopen the debate about how we use the tax system to encourage pensions. There is a huge annual bill for allowing people to put untaxed income into their pension scheme. According to the latest figure I have seen, the net cost is about £22.8 billion in income tax, plus £15 billion in national insurance, so we are talking about £38 billion of taxpayers’ money being used to incentivise pensions saving each year. Okay, some of that money comes back when pensions start to be drawn, but it is still a large amount. The more flexible we make savings arrangements, so that people can choose when they draw down their pension and can do so 10 years before they retire, the weaker we make the justification for saying, “We should do this pre-tax”, because we are distorting the savings market.

I suspect that the only reason most people would choose to save into a defined contribution pension, locking their money away at the whim of some unscrupulous pension provider who charges them for things they do not understand and finally getting their money back 30 years later, is that they get this huge tax advantage. If we are going to start enabling people to have large amounts of that money, tax-free, a long time before they retire, does that change the equation? Perhaps we should be thinking about these things. Is this the right way to distort the pensions market? Should we not equally incentivise people to put money into an individual savings account every year and have a bit more control over it and a bit more visibility? Is that better protection for them?

We desperately want people to save money for their retirement, and we want it locked away so that they cannot spend it each year, and I suspect that using the tax system to achieve that is still very much the right answer. However, we probably need to think again about how much we are spending on higher-rate tax relief on pension contributions in order to make the system more flexible.

High Court Judgment (John Downey)

Debate between Lady Hermon and Nigel Mills

Thursday 27th March 2014 Commons Chamber

[Nigel Mills]

I am grateful to my hon. Friend. One thing that needs to come out of the various inquiries is what the current legal status of the letters is in the light of the judgment and, if we are not happy with that legal status, how we can get to a legal position that we are happy with. It might be possible—I am not a lawyer; I do not know—for the Northern Ireland Office, the Secretary of State, the Attorney-General or the Minister of Justice in Northern Ireland to write to every recipient of such a letter and say, “Just to be clear, you can’t rely on these things to avoid prosecution if there’s evidence that justifies a prosecution.”

This all prompts the question: what was the point of the Historical Enquiries Team—now part of the Police Service of Northern Ireland—going back and re-investigating all those old cases if, I assume not to its knowledge, 200 or so people whom it might have been investigating as part of that process had a letter saying that past evidence would not be used to bring a prosecution? What was the point of that process?

[Lady Hermon]

Will the hon. Gentleman also comment on the odd timing of Mr Downey’s letter? We know from the judgment that it was signed off on 20 July 2007. I would briefly remind the House that in 2007 we had a successful First Minister, Ian Paisley senior, sitting with the Deputy First Minister, Martin McGuinness. Indeed, so good was their working relationship at the time—they took up office at the beginning of May 2007—that they were unfortunately nicknamed the “Chuckle Brothers”. However, the peace process in Northern Ireland was very secure in the early spring of 2007. Sinn Fein had come on to the policing board, and the IRA had decommissioned in 2005. What was there to save in the peace process by signing off Mr Downey’s letter in July 2007?

[Nigel Mills]

I suspect the hon. Lady knows the position far better than I, so there is not much need for me to add anything to what she has said.

To return to the status of the letters, if we do not like it, we need to discover the process for, if anything, restoring the position to what we think it should be—that they do not confer any kind of amnesty. If that requires a Bill to come before this House, perhaps we should do that. Given the devolution of justice, it might require something to go through the Assembly. I suspect that that might be a political challenge under the circumstances, but it is important that one of the outcomes of the inquiries is getting the legal position to where it should be, in the interests of fair and transparent justice for all the victims, on all sides.

I do not see how we can have a process that applies to only one community and not the security services. I think that was a grave mistake in entering into this process. Clearly it would have been better to have a full debate on the amnesty. We could all have had a vote on an amnesty—if it had not gone through, everyone should have been prosecuted where there was evidence; if it had gone through, it would be put behind people. That is clearly a debate that can be had now—it was had nearly a decade ago—but we have to take the assurances of all the Northern Ireland Members who are here for this debate that that is not something that would be welcomed in Northern Ireland. There is no desire for that amnesty.

I have no great knowledge of Northern Ireland law. However, having sat through some inquiries on the Select Committee on Northern Ireland that looked at the equalities position in Northern Ireland and the power of the law to prevent one community from being favoured over another, I cannot see any way under Northern Irish law that there could be a process with any legal effect that so obviously favoured one community over the other. If I was a loyalist who feared prosecution or who perhaps was being prosecuted, I might be arguing and saying, “Wait a minute, there’s been this process for one side that ought to have applied equally. I should have had the right to apply for that letter. If I had been given that letter, I could have my prosecution stayed.” Indeed, I believe that might be the subject of a case. If I was a member of the security services who might face prosecution, I would be making that exact point as well: “Wait a minute. Why wasn’t I given the chance to write in 2000 and ask if I was being investigated and whether there was any evidence against me? If I had received my letter, I could have had my prosecution stayed.”

We have created a mess, and not just for the recipients of these letters. We might not like the position they are in now, and in every prosecution of someone from the security services or the loyalist side, I am sure the first thing their lawyer will do is try to get their prosecution stayed on the grounds that the process did not apply equally to all members of the community. We have created a mess, and the actions of the then Prime Minister and Secretary of State—which, as is clear from the judgment, deliberately created a process that was designed to achieve that—are thoroughly shameful to British justice.

This is perhaps one of the bleakest episodes that we will ever see, because it has tarnished a peace process that did not need tarnishing—a process that is working and needs to work. It was heartening that the leader of the Democratic Unionist party was clear earlier that he did not want the institutions torn down—he did not see that as a solution or something that would give a political advantage—and that the institutions need to be made to work. Whatever the outcome of the inquiries, I hope that all the parties stick by that. The best way forward is for the process to advance and the institutions to get stronger, not to try to unravel them, no matter how shameful this case was.

Northern Ireland (Miscellaneous Provisions) Bill

Debate between Lady Hermon and Nigel Mills

Tuesday 9th July 2013 Commons Chamber

[Nigel Mills]

Absolutely, and if this amendment were passed, a donor would still have 14 months in which to make any donations they wanted to make and have them not made public. I suspect that would get the political parties through the 2015 general election, and that if they planned things carefully, they could get enough funds to get through the 2016 Assembly elections, so there would be no detriment to party funding until perhaps the 2020 elections in terms of the need for very large donations. That would give everyone a large amount of time to adjust to these new transparency rules.

I therefore ask the Minister to set out why the Government are apparently reluctant to go down this route even for the largest donations. I note that in their response to the Select Committee they said they would carefully consider any restrictions on transparency after October 2014. It would be useful to understand what their criteria are for making that decision. I accept, however, that the Minister cannot, and should not, tell us the specific intelligence he has about security threats.

Northern Ireland Members obviously understand Northern Ireland politics better than I do, but it is my understanding that the details of anyone who nominates a candidate or who stands for a council are published. If we have not had any evidence that there is a real security threat to people participating in those aspects of Northern Ireland democracy, why do we have this threat in respect of donations? It is worth asking how credible it is to have those two opposing situations, whereby it is safe to nominate or stand but it is not safe to donate money. I am not sure whether there is a very convincing argument for that.

[Lady Hermon]

Like the hon. Gentleman, I have the privilege of sitting on the Northern Ireland Affairs Committee. When we took evidence on this issue, we took evidence privately and in public session, and we took it in written as well as oral form. Did we ever receive evidence from a donor to any political party or to any independent Member of the Parliament that they felt at risk of being targeted by terrorists or anyone else for donating?